In a surprise move (or maybe not so surprising, with the continuous bad news coming from the exchange), Swyftx announced yesterday that it will be canceling its planned merger with Superhero, an ASX and US share broker. The companies had announced their intention to merge in June of 2022.
The news of the partnership breakup follows a string of negative developments for Swyftx. In the past few weeks, the company announced that it had laid off 30% of its workforce in addition to its previous layoffs earlier in the year, citing the need to streamline operations and place the company in a position to handle the economic downturn in the next few years. This move has raised concerns among some customers and industry experts about the financial health of the company.
In addition to the layoffs, Swyftx has also faced criticism for its practice of holding a large percentage of customer funds in third party wallets. According to recent reports, the company holds over 80% of its customer funds in these wallets, which are not directly controlled by Swyftx and may not have the same level of security and protection as the company’s own systems. This has led to concerns about the safety and security of customer funds on the platform. They are also facing criticism due to the offshore exchanges they are using being investigated by the U.S. Justice Department for possible money-laundering and sanctions violations.
In an effort to address these issues and shore up its financial position, Swyftx announced a few months ago that it was seeking additional capital from investors. However, it is not yet clear whether the company has been successful in raising the needed funds or what the impact of these efforts will be on its operations to stay afloat. Swyftx assured customers the merger was still going ahead despite this less than a month ago, however this has now been deemed false.
According to a statement from Swyftx, the company cited regulatory issues with the Australian Securities and Investments Commission (ASIC) as the official reason for the cancellation. Although nothing has been confirmed, speculation from investors as well as recent news suggest that continued financial difficulties at Swyftx may have played a role in the decision.
The proposed merger between Swyftx and Superhero was seen as a step forward for the cryptocurrency industry, as it would have brought together two players in different sectors of the financial world.
However, the cancellation of the merger has cast some doubt on Swyftx as well as the future of a possible ‘super app’ that allows customers to trade both shares and cryptocurrencies.
Regulatory uncertainty has some investors wary, and the cancellation of the Swyftx-Superhero deal could further shake confidence in the remaining users of the exchange.
It is not yet known what the next steps will be for Swyftx and Superhero. Alex Harper, Swyftx’s chief executive officer had the following to say ‘The policy environment has changed significantly since we announced the merger and neither party has been able to realise the vision of the merger in any meaningful way’ he continued, ‘We currently face a scenario where there might be no realised benefits to customers from the merger until 2024 at the earliest. It is a disappointing outcome but ultimately, we took this decision in the best interests of both Superhero and Swyftx, as well as their customers’
It is not yet clear how Swyftx will address these issues or whether it will be able to recover from its recent setbacks. With the future of the company as a whole still uncertain, it is hard to say how Swyftx will perform going forward.